Ahead of Chewy's Q1 Call: A Look at Forecasts, Trends and Fundamentals
By:Gus Downing
Since its initial pubic offering in June 2019, Chewy (CHWY) has been a mixed performer in the market. It was a darling in 2020 and a deplorable in 2021. It has found a channel in 2022 and has stuck with it. Its earnings have been a similarly mixed bag with two bad misses in its last six calls. After making three-year highs last week, all eyes turn to the pet food giant ahead of its earnings call tomorrow morning.
Consensus analyst estimates for Chewy’s earnings per share (EPS) and revenue are $0.17 and $3.08 billion, respectively. Active customers are forecast at 20.6 million, reflecting a moderate increase of 3% year-over-year (YoY). Analyst ratings and price targets are highly mixed but hover between hold and buy, with price targets ranging from as low as $27 to as high as $60.
Analysts also look to pet adoption trends in general to anticipate Chewy’s growth. Those indicators have stabilized in recent months after a prolonged slowdown starting at the end of 2024. Investors will also be pay a great deal of attention to Chewy’s “Autoship” service, which enables customers to opt in for recurring deliveries of pet necessities.
There is also some short-term uncertainty for the company at the moment, as it has already announced its CFO will be leaving the company by the end of the month; though there is an argument to be made that the market has already had enough time to price in that information.
Chewy’s Q4 FY2025 earnings call at the end of March blew consensus estimates out of the water. The company reported an EPS of $0.05 per share on estimates of $0.027, and revenue of $3.25 billion (+15% YoY) on estimates of $3.2 billion.
Its primary drivers of growth in that quarter were an increase in active customers and increased adoption of the Autoship service, with a slight improvement in gross margins. This earnings call led to a rally of over 20% in the last two months, and Chewy just touched a three-year high of $46 on June 6.
Four key catalysts could move Chewy one way or the other after this earnings call:
Besides those four core criteria, other factors that will play a lesser part in the company’s post-earnings move tomorrow include analyst sentiment, price targets and macro consumer risk.
Chewy is a highly mixed bag that’s very tough to pass judgement on headed into tomorrow’s call. Numerous bullish and bearish factors are at work and attempting to game out which ones will take priority over others is both challenging and dangerous. Any trades centered around this call should be placed with an abundance of caution.
Chewy may sell food for both bulls and bears, but both can’t be right tomorrow morning.
Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
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